Norges Bank

Staff Memo

Norwegian banks’ adjustment to higher capital requirements

Hanna Winje and Lars-Tore Turtveit
Staff Memo

Banks have increased their capital ratios in recent years to meet stricter regulatory requirements. This paper examines how the largest Norwegian banks have adjusted to higher capital requirements over the past five years. We find that this adjustment has mainly taken place through an increase in equity in the form of retained earnings. At the same time, banks' risk-weighted assets have decreased, even though their total assets have grown. This also contributes to pushing up capital ratios.

Staff Memos present reports and documentation written by staff members and affiliates of Norges Bank, the central bank of Norway. Views and conclusions expressed in Staff Memos should not be taken to represent the views of Norges Bank.

ISSN 1504-2596 (online)

Published 28 October 2014 10:00
Published 28 October 2014 10:00